Ex-spy boss lashes out at PM's claims

Former spy agency boss Sir Bruce Ferguson says Prime Minister John Key must be "smoking dope" for linking failings at the bureau to him and other former directors with a military or defence background.

The comment is the latest salvo in a tit-for-tat skirmish between the pair which began when Sir Bruce last week slammed the process which saw Mr Key's childhood friend and top civil servant Ian Fletcher appointed as GCSB spy bureau director after the Prime Minister rang him about the job in 2011.

Mr Key hit back at the time, saying Sir Bruce was speaking out publicly because he was implicated in the draft version of a soon-to-be released report by former Cabinet Secretary Rebecca Kitteridge, which would identify "quite significant" and long-standing problems within the bureau.

Mr Key said there were "issues that were there under Mr Ferguson and others and that shows you that just having a military or defence background actually hasn't delivered the robustness of that organisation that New Zealanders would expect".

Sir Bruce said yesterday he took "great exception" to Mr Key's comments.

"He is smoking dope basically on that one, he really is, that's an outrageous comment to make."

Mr Key "can think what he wants" but the Prime Minister "didn't really take much interest in the organisation as far as I was aware of while I was there".

Sir Bruce said the process by which Mr Fletcher was appointed was not up to scratch because he was the only candidate interviewed. That was after Mr Key and State Services Commissioner Iain Rennie discarded four other applicants, including some with the high-level intelligence and defence experience which Sir Bruce believed was necessary for the role.

He confirmed he had read Ms Kitteridge's draft report which was "definitely" not critical of the way the GCSB was run under former directors who came from a military or intelligence background, "and I said to Rebecca I didn't have any problems with it and she knows that".

Mr Key, who is in China, did not respond to Sir Bruce's "smoking dope" comment, but told the Herald last night: "The report's going to be released in the very near future when I return to New Zealand and I think people will be able to read it and draw their own conclusions."

Sir Bruce said the report "goes through cultural issues" at the bureau which he discussed with Ms Kitteridge. He said those issues arose from the way the bureau operated on a "compartmentalised" or "need-to-know basis" where personnel didn't tell each other about their work.

Ms Kitteridge was seconded to the GCSB to conduct an inquiry after it emerged that the bureau had been illegally spying on internet tycoon Kim Dotcom.

Mr Key, who initially said he learned of the illegal spying in September, later said the operation was briefly referred to during a GCSB briefing he attended months earlier.

Senior sources have told the Herald that the person suspected of leaking information to Labour about that briefing - including claims Mr Key was not only briefed about the Dotcom surveillance, but joked about it - had been identified and had now "lawyered up".

If the report establishes a leak, the GCSB's legislation carries a penalty of up to two years in prison.